Compounding Life

Microsoft (MSFT) declared its quarterly dividend yesterday. In addition it also announced that the board of directors has passed a resolution:

The board also passed a resolution recommending that the company’s shareholders approve amendments to Microsoft’s articles of incorporation to give shareholders representing 25 percent or more of outstanding shares the right to call special shareholder meetings.

The ability of shareholders to call special shareholder meetings is increasingly considered an important shareholder right,” said John Seethoff, vice president and deputy general counsel for Microsoft. “Proposing this new policy is another example of our ongoing commitment to maintaining strong corporate governance principles and practices.

This will be voted on by shareholders in November.

A pro-shareholder move like this from Microsoft’s board is not all that surprising. Considering that Bill Gates is good friends with Warren Buffett and serves on the board of Berkshire Hathaway, you would think that the Microsoft board would have a pro-shareholder bent to it. But at the end of the day even Bill Gates will not be calling any special meetings on his own. At around 733 million shares he is the largest shareholder ringing in just above 8%. The largest institutional investor is just under 4%.

My first impression of this was that it is a more of PR move to say “See we care about our shareholders!”. In reality if the management of the company were to start failing its shareholders it is quite possible that larger shareholders could band together or reach out to rally the support of a group representing %25. All in all I think its a good move and I like the fact that the board of directors decided to propose this resolution.

Disclosure: I own shares of MSFT at the time of this writing.

Got a tweet from DividendStocks ( website link ) about a dividend increase post on Seeking Alpha. One of the companies increasing their dividend is Wesco Financial  (WSC). WSC is run by Charlie Munger and 80% is of the stock is owned by Berkshire Hathaway.  I have a small position in WSC and while the dividend increase of 1 cent from 0.385 to 0.395 is not very much it is still signifigant because WSC has consistently increased their dividend payment for 37 years.  As the Seeking Alpha article states:

Wesco Financial Corporation is a dividend champion and an achiever

Some people consider WSC to be a mini-BRK but Charlie states his own thoughts on that subject in the 2007 annual letter:

 

Business and human quality in place at Wesco continues to be not nearly as good, all factors considered, as that in place at Berkshire Hathaway.Wesco is not an equally-goodbut-smaller version of Berkshire Hathaway, better because its small size makes growth easier. Instead, each dollar of book value at Wesco continues plainly to provide much less intrinsic value than a similar dollar of book value at Berkshire Hathaway. Moreover, the quality disparity in book value’s intrinsic merits has, in recent years, continued to widen in favor of Berkshire Hathaway.

All that said, we make no attempt to appraise relative attractiveness for investment of Wesco versus Berkshire Hathaway stock at present stock-market quotations.

One interesting thing to note is that from a value perspective WSC is trading at a discount to its cash and book value. Considering who is at the helm I think you can trust their accounting  practices and valuations a lot more than most. 

On a slightly humorous note it looks Wesco and Berkshire do share the same web designer